522 SUPREME COURT REPORTS ANNOTATED

Philippine Long Distance Telephone Company, Inc. vs. City of

Davao

*
G.R. No. 143867. August 22, 2001.

PHILIPPINE LONG DISTANCE TELEPHONE COMPANY,

INC., petitioner, vs. CITY OF DAVAO and ADELAIDA B.
BARCELONA, in her capacity as the City Treasurer of Davao,
respondents.

Taxation; Tax Code; The Tax Code provision withdrawing the tax
exemption was not construed as prohibiting future grants of
exemptions from all taxes.—The trial court held that, under these
provisions, all exemptions granted to all persons, whether natural and
juridical, including those which in the future might be granted, are
withdrawn unless the law granting the exemption expressly states that
the exemption also applies to

____________________

39 People v. Mitra, 328 SCRA 774 (2000).

* SECOND DIVISION.

523

VOL. 363, AUGUST 22, 2001 523

Philippine Long Distance Telephone Company, Inc. vs. City of Davao

local taxes. We disagree. Sec. 137 does not state that it covers future
exemptions. In Philippine Airlines, Inc. v. Edu, where a provision of
the Tax Code enacted on June 27, 1968 (R.A. 5431) withdrew the
exemption enjoyed by PAL, it was held that a subsequent amendment
of PAL’s franchise, exempting it from all other taxes except that
imposed by its franchise, again entitled PAL to exemption from the
date of the enactment of such amendment. The Tax Code provision
withdrawing the tax exemption was not construed as prohibiting future
grants of exemptions from all taxes.
Same; Same; The grant of taxing powers to local government
units under the Constitution and the LGC does not affect the power of
Congress to grant exemptions to certain persons, pursuant to a
declared national policy.—Indeed, the grant of taxing powers to local
government units under the Constitution and the LGC does not affect
the power of Congress to grant exemptions to certain persons, pursuant
to a declared national policy. The legal effect of the constitutional grant
to local governments simply means that in interpreting statutory
provisions on municipal taxing powers, doubts must be resolved in
favor of municipal corporations.
Same; Same; Tax exemption must be expressed in the statute in
clear language; The exemption must be interpreted in strictissimi juris
against the taxpayer and liberally in favor of the taxing authority.—
The tax exemption must be expressed in the statute in clear language
that leaves no doubt of the intention of the legislature to grant such
exemption. And, even if it is granted, the exemption must be
interpreted in strictissimi juris against the taxpayer and liberally in
favor of the taxing authority.

PETITION for review on certiorari of a decision of the

Regional Trial Court of Davao City, Br. 13.

The facts are stated in the opinion of the Court.

     Estelito P. Mendoza for petitioner.
     Office of the City Legal Officer for respondents.

MENDOZA, J.:

This is a petition for review on certiorari under1 Rule 45 of the

1997 Rules of Civil Procedure of the resolution, dated June 23,
____________________

1 Per Judge Isaac G. Robillo, Jr.

524

524 SUPREME COURT REPORTS ANNOTATED

Philippine Long Distance Telephone Company, Inc. Fvs. City of
Davao

2000, of the Regional Trial Court, Branch 13, Davao City,

affirming the tax assessment of petitioner and the denial of its
claim for tax refund by the City Treasurer of Davao.
The facts are as follows:
On January 1999, petitioner Philippine Long Distance
Telephone Co., Inc. (PLDT) applied for a Mayor’s Permit to
operate its Davao Metro Exchange. Respondent City of Davao
withheld action on the application pending payment by
petitioner of the local franchise tax in the amount 2
of
P3,681,985.72 for the first 3to the fourth quarter of 1999. In a
letter dated May 31, 1999, petitioner protested the assessment
of the local franchise tax and requested a refund of the franchise
tax paid by it for the year 1997 and the first to the third quarters
of 1998. Petitioner contended that it was exempt from the
payment of franchise tax based on an opinion of the Bureau of
Local Government Finance (BLGF), dated June 2, 1998, which
reads as follows:

PLDT:

Section 12 of RA 7082 provides as follows:

“SEC. 12. The grantee, its successors or assigns shall be liable to pay the same
taxes on their real estate, buildings, and personal property, exclusive of this
franchise, as other persons or corporations are now or hereafter may be
required by law to pay. In addition thereto, the grantee, its successors or
assigns shall pay a franchise tax equivalent to three percent (3%) of all gross
receipts of the telephone or other telecommunications businesses transacted
under this franchise by the grantee, its successors or assigns, and the said
percentage shall be in lieu of all taxes on this franchise or earnings thereof . . .”
 It appears that RA 7082 further amending Act No. 3436 which
granted to PLDT a franchise to install, operate and maintain a
telephone system throughout the Philippine Islands was approved on
August 3, 1991. Section 12 of said franchise, likewise, contains the “in
lieu of all taxes” proviso.

___________________

2 Respondent’s Comment, Annex A; Rollo, pp. 102, 116.

3 Id., Annex B; id., pp. 118-119.

525

VOL. 363, AUGUST 22, 2001 525

Philippine Long Distance Telephone Company, Inc. vs. City of
Davao

In this connection, Section 23 of RA 7925, quoted hereunder, which

was approved on March 1, 1995, provides for the equality of treatment
in the telecommunications industry:

“SEC. 23. Equality of Treatment in the Telecommunications Industry.—Any

advantage, favor, privilege, exemption, or immunity granted under existing
franchises, or may hereafter be granted, shall ipso facto become part of
previously granted telecommunications franchises and shall be accorded
immediately and unconditionally to the grantees of such franchises: Provided,
however, That the foregoing shall neither apply to nor affect provisions of
telecommunications franchises concerning territory covered by the franchise,
the life span of the franchise, or the type of service authorized by the
franchise.” (Italics supplied.)

On the basis of the aforequoted Section 23 of RA 7925, PLDT as a

telecommunications franchise holder becomes automatically covered
by the tax exemption provisions of RA 7925, which took effect on
March 16, 1995.
Accordingly, PLDT shall be exempt from the payment of franchise
and business taxes imposable by LGUs under Sections 137 and 143
(sic), respectively, of the LGC, upon the effectivity of RA 7925 on
March 16, 1995. However, PLDT shall be liable to pay the franchise
and business taxes on its gross receipts realized from January 1, 1992
up to March 15, 1995, during which period PLDT was not enjoying the
4
“most favored clause” proviso of RA 7025 (sic).

In a letter dated September 27, 1999, respondent Adelaida B.

Barcelona, City Treasurer of Davao, 5
denied the protest and
claimed for tax refund of petitioner, citing the legal opinion of
the City Legal Officer of Davao and Art. 10, §1 of Ordinance
No. 230, Series of 1991, as amended by Ordinance No. 519,
Series of 1992, which provides:

Notwithstanding any exemption granted by any law or other special

law, there is hereby imposed a tax on businesses enjoying a franchise,
at a rate of Seventy-five percent (75%) of one percent (1%) of the
gross annual receipts for the preceding calendar year based on the
income or receipts realized within the territorial jurisdiction of Davao
6
City.

___________________

4 Rollo, pp. 57-58, 118; 2nd Indorsement, pp. 1-2.

5 Respondents’ Comment, Annex C; Rollo, p. 120.
6 Id.

526

526 SUPREME COURT REPORTS ANNOTATED

Philippine Long Distance Telephone Company, Inc. vs. City of
Davao

Petitioner received respondent City Treasurer’s order of denial

on October 1, 1999. On November 3, 1999, it filed a petition in
the Regional Trial Court of Davao seeking a reversal of
respondent City Treasurer’s denial of petitioner’s protest and
the refund of the franchise tax paid by it for the year 1998 in the
amount of P2,580,829.23. The petition was filed pursuant to
§§195 and 196 of the Local Government Code (R.A. No. 7160).
No claim for refund of franchise taxes paid in 1997 was made
as the same had already prescribed under §196 of the LGC,
which provides that claims for the refund of taxes paid under it
must be made7
within two (2) years from the date of payment of
such taxes.
The trial court denied petitioner’s appeal and affirmed the
City Treasurer’s decision. It ruled that the LGC withdrew all tax
exemptions previously enjoyed by all persons and authorized
local government units to impose a tax on businesses enjoying a
franchise notwithstanding the grant of tax exemption to them.
The trial court likewise denied petitioner’s claim for exemption
under R.A. No. 7925 for the following reasons: (1) it is clear
from the wording of §193 of the Local Government Code that
Congress did not intend to exempt any franchise holder from
the payment of local franchise and business taxes; (2) the
opinion of the Executive Director of the Bureau of Local
Government Finance to the contrary is not binding on
respondents; and (3) petitioner failed to present any proof that
Globe and Smart were enjoying local franchise and business tax
exemptions.
Hence, this petition for review based on the following
grounds:

I. THE LOWER COURT ERRED IN APPLYING

SECTION 137 OF THE LOCAL GOVERNMENT
CODE, WHICH ALLOWS A CITY TO IMPOSE A
FRANCHISE TAX, AND SECTION 193 THEREOF,
WHICH PROVIDES FOR WITHDRAWAL OF TAX
EXEMPTION PRIVILEGES.
II. THE LOWER COURT ERRED IN NOT HOLDING
THAT UNDER PETITIONER’S FRANCHISE, AS
IMPLICITLY AMENDED AND EXPANDED BY
SECTION 23 OF REPUBLIC ACT NO. 7925
(PUBLIC TELECOMMUNICATIONS POLICY
ACT), TAKING INTO ACCOUNT THE
FRANCHISES OF GLOBE TELECOM, INC. AND
SMART COM-

_____________________

7 Rollo, p. 73; Petition, p. 3.

527
 VOL. 363, AUGUST 22, 2001 527
Philippine Long Distance Telephone Company, Inc. vs. City of
Davao

MUNICATIONS, INC., WHICH WERE ENACTED

SUBSEQUENT TO THE LOCAL GOVERNMENT
CODE, NO FRANCHISE AND BUSINESS TAXES
MAY BE IMPOSED ON PETITIONER BY
RESPONDENT CITY.
III. THE LOWER COURT ERRED IN NOT GIVING
WEIGHT TO THE RULING OF THE BUREAU OF
LOCAL GOVERNMENT FINANCE THAT
PETITIONER IS EXEMPT FROM THE PAYMENT
OF FRANCHISE AND BUSINESS TAXES, AMONG
OTHERS, IMPOSABLE BY LOCAL
GOVERNMENT UNITS UNDER THE LOCAL
GOVERNMENT CODE.

First. The LGC, which took effect on January 1. 1992,

provides:

SEC. 137 Franchise Tax.—Notwithstanding any exemption granted by

any law or other special law, the province may impose a tax on
businesses enjoying a franchise, at a rate not exceeding fitly percent
(50%) of one percent (1%) of the gross annual receipts for the
preceding calendar year based on the incoming receipt, or realized,
within its territorial jurisdiction.
In the case of a newly started business, the tax shall not exceed one-
twentieth (1/20) of one percent (1%) of the capital investment. In the
succeeding calendar year, regardless of when the business started to
operate, the tax shall be based on the gross receipts for the preceding
8
calendar year, or any fraction thereof, as provided herein.
SEC. 193. Withdrawal of Tax Exemption Privileges.—unless
otherwise provided in this Code, tax exemptions or incentives granted
to, or presently enjoyed by all persons, whether natural or juridical,
including government-owned or -controlled corporations, except local
water districts, cooperatives duly registered under R.A. 6938, non-
stock and non-profit hospitals and educational institutions, are hereby
withdrawn upon the effectivity of this Code.
_______________________

8 This applies to cities by virtue of the following provision:

SEC. 151. Scope of Taxing Powers.—Except as otherwise provided in this
Code, the city may levy the taxes, fees, and charges which the province or
municipality may impose: Provided, however, That the taxes, fees, and charges
levied and collected by highly urbanized and independent component cities
shall accrue to them and distributed in accordance with the provisions of this
Code.
The rates of taxes that the city may levy may exceed the maximum rates
allowed for the province or municipality by not more than fifty percent (50%)
except the rates of professional and amusement taxes.

528

528 SUPREME COURT REPORTS ANNOTATED

Philippine Long Distance Telephone Company, Inc. vs. City of
Davao

The trial court held that, under these provisions, all exemptions
granted to all persons, whether natural and juridical, including
those which in the future might be granted, are withdrawn
unless the law granting the exemption expressly states that the
exemption also applies to local taxes. We disagree. Sec. 137
does not state that it 9covers future exemptions. In Philippine
Airlines, Inc. v. Edu, where a provision of the Tax Code
enacted on June 27, 1968 (R.A. 5431) withdrew the exemption
enjoyed by PAL, it was held that a subsequent amendment of
PAL’s franchise, exempting it from all other taxes except that
imposed by its franchise, again entitled PAL to exemption from
the date of the enactment of such amendment. The Tax Code
provision withdrawing the tax exemption was not construed as
prohibiting future grants of exemptions from all taxes.
Indeed, the grant of taxing powers to local government units
under the Constitution and the LGC does not affect the power
of Congress to grant exemptions to certain persons, pursuant to
a declared national policy. The legal effect of the constitutional
grant to local governments simply means that in interpreting
statutory provisions on municipal taxing powers,10
doubts must
be resolved in favor of municipal corporations.
 The question, therefore, is whether, after the withdrawal of
its exemption by virtue of §137 of the LGC, petitioner has again
become entitled to exemption from local franchise tax.
Petitioner answers in the affirmative and points to §23 of R.A.
No. 7925, in relation to the franchises of Globe Telecom
(Globe) and Smart Communications, Inc. (Smart), which
allegedly grant the latter exemption from local franchise taxes.
To begin with, tax exemptions are highly disfavored. The
reason for this was explained by this Court in Asiatic Petroleum
11
Co. v. Llanes, in which it was held:

_____________________

9 164 SCRA 320 (1988).

10 Manila Electric Company v. Province of Laguna, 306 SCRA 750 (1999);
City Government of San Pablo, Laguna v. Reyes, 305 SCRA 353 (1999).
11 49 Phil. 466, 471-472 (1926).

529

VOL. 363, AUGUST 22, 2001 529

Philippine Long Distance Telephone Company, Inc. vs. City of
Davao

. . . Exemptions from taxation are highly disfavored, so much so that

they may almost be said to be odious to the law. He who claims an
exemption must be able to point to some positive provision of law
creating the right. . . As was said by the Supreme Court of Tennessee
in Memphis vs. U. & P. Bank (91 Tenn., 546, 550), “The right of
taxation is inherent in the State. It is a prerogative essential to the
perpetuity of the government; and he who claims an exemption from
the common burden must justify his claim by the clearest grant of
organic or statute law.” Other utterances equally or more emphatic
come readily to hand from the highest authority. In Ohio Life Ins. and
Trust Co. vs. Debolt (16 Howard, 416), it was said by Chief Justice
Taney, that the right of taxation will not be held to have been
surrendered, “unless the intention to surrender is manifested by words
too plain to be mistaken.” In the case of the Delaware Railroad Tax (18
Wallace, 206, 226), the Supreme Court of the United States said that
the surrender, when claimed, must be shown by clear, unambiguous
language, which will admit of no reasonable construction consistent
with the reservation of the power. If a doubt arises as to the intent of
the legislature, that doubt must be solved in favor of the State. In Erie
Railway Company vs. Commonwealth of Pennsylvania (21 Wallace,
492, 499), Mr. Justice Hunt, speaking of exemptions, observed that a
State cannot strip itself of the most essential power of taxation by
doubtful words. “It cannot, by ambiguous language, be deprived of this
highest attribute of “sovereignty.” In Tennessee vs. Whitworth (117
U.S., 129, 136), it was said: “In all cases of this kind the question is as
to the intent of the legislature, the presumption always being against
any surrender of the taxing power.” In Farrington vs. Tennessee and
County of Shelby (95 U.S., 679, 686), Mr. Justice Swayne said: “. . .
When exemption is claimed, it must be shown indubitably to exist. At
the outset, every presumption is against it. A well-founded doubt is
fatal to the claim. It is only when the terms of the concession are too
explicit to admit fairly of any other construction that the proposition
can be supported.”

The tax exemption must be expressed in the statute in clear

language that leaves no doubt of the intention of the legislature
to grant such exemption. And, even if it is granted, the
exemption must be interpreted in strictissimi juris against the
12
taxpayer and liberally in favor of the taxing authority.

___________________

12 Commissioner of Internal Revenue v. Court of Appeals, 298 SCRA 83

(1998); Commissioner of Customs v. Philippine Acetylene Company, 39 SCRA
70 (1971); Commissioner of Internal Revenue v. Guerrero, 21 SCRA 180
(1967).

530

530 SUPREME COURT REPORTS ANNOTATED

Philippine Long Distance Telephone Company, Inc. vs. City of
Davao

In the present case, petitioner justifies its claim of tax

exemption by strained inferences. First, it cites R.A. No. 7925,
otherwise known as the Public Telecommunications Policy Act
of the Philippines, §23 of which reads:

SEC. 23. Equality of Treatment in the Telecommunications Industry.—

Any advantage, favor, privilege, exemption, or immunity granted
under existing franchises, or may hereafter be granted, shall ipso facto
become part of previously granted telecommunications franchises and
shall be accorded immediately and unconditionally to the grantees of
such franchises: Provided, however, That the foregoing shall neither
apply to nor affect provisions of telecommunications franchises
concerning territory covered by the franchise, the life span of the
franchise, or the type of service authorized by the franchise.

Petitioner then claims that Smart and Globe enjoy exemption

from the payment of the franchise tax by virtue of their
legislative franchises per opinion of the Bureau of Local
Government Finance of the Department of Finance. Finally, it
argues that because Smart and Globe are exempt from the
franchise tax, it follows that it must likewise be exempt from
the tax being collected by the City of Davao because the grant
of tax exemption to Smart and Globe ipso facto extended the
same exemption to it.
The acceptance of petitioner’s theory would result in absurd
consequences. To illustrate: In its franchise, Globe is required to
pay a franchise tax of only one and one-half percentum (1
1/2%) of all gross receipts from its transactions while Smart is
required to pay a tax of three percent (3%) on all gross receipts
from business transacted. Petitioner’s theory would require that,
to level the playing field, any “advantage, favor, privilege,
exemption, or immunity” granted to Globe must be extended to
all telecommunications companies, including Smart. If, later,
Congress again grants a franchise to another
telecommunications company imposing, say, one percent (1%)
franchise tax, then all other telecommunications franchises will
have to be adjusted to “level the playing field” so to speak. This
could not have been the intent of Congress in enacting §23 of
Rep. Act 7925. Petitioner’s theory will leave the Government
with the burden of having to keep track of all granted
telecommunications franchises, lest some companies be treated
unequally. It
 531

VOL. 363, AUGUST 22, 2001 531

Philippine Long Distance Telephone Company, Inc. vs. City of
Davao

is different if Congress enacts a law specifically granting

uniform advantages, favor, privilege, exemption, or immunity
to all telecommunications entities.
The fact is that the term “exemption” in §23 is too general.
A cardinal rule in statutory construction is that legislative intent
must be ascertained from a consideration of the statute as a
whole and not merely of a particular provision. For, taken in the
abstract, a word or phrase might easily convey a meaning which
is different from the one actually intended. A general provision
may actually have 13
a limited application if read together with
other provisions. Hence, a consideration of the law itself in its
entirety and the proceedings of both Houses of Congress is in
14
order.
Art. I of Rep. Act No. 7925 contains the general provisions,
stating that the Act shall be known as the Public
Telecommunications Policy Act of the Philippines, and a
15
definition of terms. Art. II provides for its policies and
objectives, which is to foster the improvement and expansion of
telecommunications services in the country through: (1) the
construction of telecommunications infrastructure and
interconnection facilities, having in mind the efficient use of the
radio frequency spectrum and extension of basic services to
areas not yet served; (2) fair, just, and reasonable rates and tariff
charges; (3) stable, transparent, and fair administrative
processes; (4) reliance on private enterprise for direct provision
of telecommunications services; (5) dispersal of ownership of
telecommunications entities in compliance with the
constitutional mandate to democratize the ownership of public
utilities; (6) encouragement of the establishment of
interconnection with other countries to provide access to
international communications highways and development of a
competitive export-oriented domestic telecommunications
manufacturing industry; and (7) development of human
resources skills and capabilities to sustain the growth and
16
development of telecommunications.

___________________

13 People v. Purisima, 86 SCRA 542 (1978).

14 National Police Commission v. De Guzman, Jr., 229 SCRA 801 (1994).
15 REP. ACT NO. 7925, §§1-3.
16 Id., §4.

532

532 SUPREME COURT REPORTS ANNOTATED

Philippine Long Distance Telephone Company, Inc. vs. City of
Davao

Art. III provides for its administration. The operational and

administrative functions are delegated to the National
Telecommunications Commission (NTC), while policy-making,
research, and negotiations in international telecommunications
matters are left 17
with the Department of Transportation and
Communications.
Art. IV classifies the categories of telecommunications
entities as: Local Exchange Operator, Inter-Exchange Carrier,
International Carrier, Value-Added Service 18Provider, Mobile
Radio Services, and Radio Paging Services. Art. V provides
for the use of other services and facilities, such as customer
premises equipment, which may be used within the premises of
telecommunications subscribers subject only to the requirement
that it is type-approved by the NTC, and radio frequency
spectrum, the assignment of which shall be subject to periodic
19
review.
Art. VI, entitled Franchise, Rates and Revenue
Determination, provides for the requirement to obtain a
franchise from Congress and a Certificate of Public
Convenience and Necessity from the NTC before a
telecommunications entity can begin its operations. It also
provides for the NTC’s residual power to regulate the rates or
tariffs when ruinous competition results or when a monopoly or
a cartel or combination in restraint of free competition exists
and the rates or tariffs are distorted or unable to function freely
and the public is adversely affected. There is also a provision
relating to revenue sharing arrangements between inter-
20
connecting carriers.
Art.
21
VII provides for the rights of telecommunications
users.
Art. VIII, entitled Telecommunications Development, where
§23 is found, provides for public ownership of
telecommunications entities, privatization22
of existing facilities,
and the equality of treatment provision.

___________________

17 Id., §§5-6.
18 Id., §§7-13.
19 Id., §§14-15.
20 Id., §§16-19.
21 Id., §20.
22 Id., §§21-23.

533

VOL. 363, AUGUST 22, 2001 533

Philippine Long Distance Telephone Company, Inc. fvs. City of
Davao

23
Art. IX contains the Final Provisions.
R.A. No. 7925 is thus a legislative enactment designed to set
the national policy on telecommunications and provide the
structures to implement it to keep up with the technological
advances in the industry and the needs of the public. The thrust
of the law is to promote gradually the deregulation of the entry,
pricing, and operations of all public telecommunications entities
and thus promote a 24level playing field in the
telecommunications industry. There is nothing in the language
of §23 nor in the proceedings of both the House of
Representatives and the Senate in enacting R.A. No. 7925
which shows that it contemplates the grant of tax exemptions to
all telecommunications entities, including those whose
exemptions had been withdrawn by the LGC.
25
 25
What this Court said in Asiatic Petroleum Co. v. Llanes
applies mutatis mutandis to this case: “When exemption is
claimed, it must be shown indubitably to exist. At the outset,
every presumptian is against it. A well-founded doubt is fatal to
the claim. It is only when the terms of the concession are too
explicit to admit fairly of any other construction that the
proposition can be supported.” In this case, the word
“exemption” in §23 of R.A. No. 7925 could contemplate
exemption from certain regulatory or reporting requirements,
bearing in mind the policy of the law. It is noteworthy that, in
holding Smart and Globe exempt from local taxes, the BLGF
did not base its opinion on §23 but on the fact that the
franchises granted to them after the effectivity of the LGC
exempted them from the payment of local franchise and
business taxes.
Second. In the case of petitioner, the BLGF opined that §23
of R.A. No. 7925 amended the franchise of petitioner and in
effect restored its exemptions from local taxes. Petitioner
contends that courts should not set aside conclusions reached by
the BLGF because its function is precisely the study of local tax
problems and it has necessarily developed an expertise on the
subject.

__________________

23 Id., §§24-27.
24 4 RECORD OF THE SENATE, No. 73, April 20, 1994, p. 871; 3
RECORD OF THE HOUSE OF REPRESENTATIVES, December 5, 1994, p.
552.
25 49 Phil. 466, 472 (1926).

534

534 SUPREME COURT REPORTS ANNOTATED

Philippine Long Distance Telephone Company, Inc. vs. City of
Davao

To be sure, the BLGF is not an administrative agency whose

findings on questions of fact are given weight and deference in
the courts. The authorities cited by petitioner pertain to the
26
 26
Court of Tax Appeals, a highly specialized court which
performs 27judicial functions as it was created for the review of
tax cases. In contrast, the BLGF was created merely to provide
consultative, services and technical assistance to local
governments and the general public on local taxation, real 28
property assessment, and other related matters, among others.
The question raised by petitioner is a legal question, to wit, the
interpretation of §23 of R.A. No. 7925. There is, therefore, no
basis for claiming expertise for the BLGF that administrative
agencies are said to possess in their respective fields.
Petitioner likewise argues that the BLGF enjoys the
presumption of regularity in the performance of its duty. It does
enjoy this presumption, but this has nothing to do with the
question in this case. This case does not concern the regularity
of performance of the BLGF in the exercise of its duties, but the
correctness of its interpretation of a provision of law.
In sum, it does not appear that, in approving §23 of R.A. No.
7925, Congress intended it to operate as a blanket tax
exemption to all telecommunications entities. Applying the rule
of strict construction of laws granting tax exemptions and the
rule that doubts should be resolved in favor of municipal
corporations in interpreting statutory provisions on municipal
taxing powers, we hold that §23 of R.A. No. 7925 cannot be
considered as having amended petitioner’s franchise so as to
entitle it to exemption from the imposition of local franchise
taxes. Consequently, we hold that petitioner is liable to pay
local franchise taxes in the amount of P3,681,985.72 for the
period covering the first to the fourth quarter

___________________

26 Commissioner of Internal Revenue v. Court of Appeals, 271 SCRA 605

(1997) citing Commissioner of Internal Revenue v. Wander Philippines, Inc.,
160 SCRA 573 (1988).
27 Philippine Refining Company v. Court of Appeals, 256 SCRA 667 (1996);
See REP. ACT NO. 1125.
28 ADMINISTRATIVE CODE, Title II, Chapter, 4, §33(4).

535
 VOL. 363, AUGUST 23, 2001 535
Samala vs. Court of Appeals

of 1999 and that it is not entitled to a refund of taxes paid by it

for the period covering the first to the third quarter of 1998.
WHEREFORE, the petition for review on certiorari is
DENIED and the decision of the Regional Trial Court, Branch
13, Davao City is AFFIRMED.
SO ORDERED.

          Bellosillo (Chairman), Quisumbing, Buena and De

Leon, Jr., JJ., concur.

Petition denied, judgment affirmed.

Note.—Exemptions from taxation are highly disfavored in

law and he who claims tax exemption must be able to justify his
claim or right. (Afisco Insurance Corporation vs. Court of
Appeals, 302 SCRA 1 [1999])

——o0o——

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